BCE Inc. 2008 Annual Report Worldreginfo - 1D26d4fe-8343-468B-Ab4c-582A387d5896 You Know Us of Course
Total Page：16
File Type：pdf, Size：1020Kb
Hello again. BCE Inc. 2008 Annual Report WorldReginfo - 1d26d4fe-8343-468b-ab4c-582a387d5896 You know us of course. Still, we’d like to reintroduce ourselves. Bell today is a company confidently moving forward. Thanks to the essential changes we made in 2008, we’ve become a leaner company striving to be more responsive to our customers’ needs. We’re determined to realize our goal: For Bell to be recognized by customers as Canada’s leading communications company. WorldReginfo - 1d26d4fe-8343-468b-ab4c-582a387d5896 Financial and operational highlights Bell subscribers (in thousands) 2008 2007 2006 Wireless 6,497 6,216 5,954 High-speed Internet 2,054 2,004 1,877 Video 1,852 1,822 1,820 Local telephone (adjusted) 7,436 7,859 8,439 BCE operations Revenue (in millions) 17,698 17,752 17,554 EBITDA1 (in millions) 7,004 6,994 6,790 Operating income (in millions) 2,864 3,479 3,314 Net earnings applicable to common 819 3,926 1,937 shares (in millions) Adjusted net earnings1, 2 (in millions) 1,811 1,884 1,676 Net earnings per common share 1.02 4.88 2.25 Adjusted net earnings per common share1, 2 2.25 2.34 1.95 Dividends declared per common share 0.73 1.46 1.32 Common dividend payout ratio 71.7% 29.2% 60.4% Free cash flow1 (in millions) 1,689 1,960 1,810 Cash from operating activities (in millions) 5,912 5,733 5,357 Capital expenditures (in millions) 2,988 3,144 3,121 Capital intensity 16.9% 17.7% 17.8% BCE financial position Total assets (in millions) 39,663 38,230 37,415 Common shareholders’ equity (in millions) 14,541 14,462 11,697 Total debt to total assets (times) 0.31 0.30 0.35 Long-term debt to total shareholders’ 0.70 0.65 0.97 equity (times) Market capitalization (in millions) 20,182 31,930 25,359 Price to earnings ratio 24.64 8.13 13.96 1 The terms EBITDA, adjusted net earnings and free cash flow are non-GAAP Financial measures. Refer to the section entitled Non-GAAP Financial Measures in the MD&A contained herein for more details concerning such non-GAAP financial measures including a reconciliation to the most comparable Canadian GAAP financial measures. 2 Before restructuring and other, net losses (gains) on investments and costs incurred to form Bell Aliant. WorldReginfo - 1d26d4fe-8343-468b-ab4c-582a387d5896 WorldReginfo - 1d26d4fe-8343-468b-ab4c-582a387d5896 THOMAS C. O’NEILL Letter to shareholders Dear fellow shareholders, 2008 was an exceptionally eventful year for your public company and an increasingly competitive Company, one that began with a privatization and cost-effective operator. We have a prudent effort and ended with BCE better positioned than plan and a clear strategy in place to achieve our ever to succeed as a public company. operational and financial objectives, all of them The outcome of the transaction effort, initiated aimed at creating value, returning it to you today, in 2007 and ultimately terminated on December and going forward. 12, 2008, was a tremendous disappointment to Bell has a clear goal and the strategy to achieve our shareholders and our team alike. We viewed it, as George Cope explains in greater detail. The the transaction as the best option for creating Board has full confidence in your management shareholder value at that time – but times team and its ability to continue to execute on its changed rapidly, and the deteriorating global 5 Strategic Imperatives. capital markets meant the transaction did not close. Already, the results show that we are a company Yet even as the transaction drew near to its moving forward. conclusion, the Company was undergoing a I would like to recognize James A. Pattison, who fundamental transformation. will retire from the Board of Directors at our next BCE accelerated its move forward as an operating Annual General Meeting on May 7, 2009. Jim company led by a resurgent Bell Canada. In July served your Company admirably as a Director 2008, our new Chief Executive Officer George and as a member of the Corporate Governance Cope and his team set a clear goal – for Bell to Committee, and I thank him for his dedication, be recognized by customers as Canada’s leading wisdom and leadership throughout his more than communications company – and instituted a four years of service to you. strategy to deliver a dramatically better customer Three new director candidates have also been experience, while attaining a competitive and nominated for election to the Board at the AGM: cost-efficient operating structure. • Barry K. Allen – Senior Advisor, Providence Strong execution of that plan by the Bell team has Equity and a Director of Harley Davidson Inc. resulted in steadily improving financial and and of Fiduciary Management, Inc. operating results. This progress is supported by a sound overall financial strategy, based on strong • Robert E. Brown – President and CEO of CAE Inc., liquidity and our ability to generate free cash Chairman of Groupe Aeroplan Inc., and a Director flow growth to fund our financial obligations. of CAE Inc. and ACE Aviation Holdings Inc. That places BCE in a position of confidence in a • Paul R. Weiss – Retired KPMG Partner and a time of economic uncertainty. Director of Empire Life Assurance Company All these elements support BCE’s objective of and of E-L Financial Services Ltd. returning value to our shareholders now and in All of these distinguished nominees bring a wealth the future. In December 2008, we moved quickly of corporate leadership and board experience to to reinstate the common share dividend, declared their roles. I greatly look forward to working with a fourth quarter 2008 common dividend, and all of them. initiated a share buy-back program. And, in February 2009, we announced that the common (signed) Thomas C. O’Neill share dividend would increase by 5%. Chair of the Board While 2008 was a tumultuous year indeed for BCE Inc. BCE and its shareholders, it concluded with your Company set on a clear path as a confident 3 WorldReginfo - 1d26d4fe-8343-468b-ab4c-582a387d5896 GEORGE A. COPE 1.5% and 2.2% respectively. The improved revenue performance resulted from higher wireless, video Letter to and high-speed Internet service revenues as well as from increased sales of IP and broadband connectivity services and ICT solutions. EBITDA shareholders growth resulted from solid wireless revenue growth and lower subscriber acquisition costs and Hello everyone, improved profitability in our Video, Enterprise, and I was very honoured to be named President and SMB units, and the substantial cost savings that Chief Executive Officer of BCE and Bell Canada resulted from the execution of the 100-day plan. in July 2008. For someone who has been part We achieved this EBITDA growth and maintained of the dynamic and fast-growing Canadian stable margins in the face of declining economic communications industry for almost 25 years, both conditions in the last half of 2008. inside and outside Bell, leading the nation’s largest Before the investment of $741 million in new and best-known communications company is a spectrum licenses, free cash flow available to our true privilege. shareholders increased 24% in 2008 thanks to The Bell team is dedicated to improving the improved operating contributions and disciplined customer experience. We realize that in capital spending, even as investment in our wireless an increasingly competitive and demanding and wireline broadband networks accelerated. Our marketplace, enhancing every possible interaction strong free cash flow in combination with adjusted we have with our current and future customers net earnings in 2008 of more than $1.8 billion, or is the key to building long-term value for your $2.25 per common share, provide a solid base for Company and you. future growth and shareholder distributions. To that end, we began Bell’s move forward with The following section of this annual report will the implementation of a 100-day plan in July that focus on each of Bell’s 5 Strategic Imperatives, focused on delivering a better customer experience highlighting in particular several game-changing at every level, and in a more efficient and cost- service, network and marketing initiatives that are effective way than ever before. We have worked driving the achievement of our imperatives. You’ll to restructure and re-energize the organization to find that the most visible new initiative undertaken focus on a clear new goal for Bell, and the strategy in support of our strategy has been the introduction required to achieve it. of the bold new Bell brand. Our goal is straightforward: From its most sensible and straightforward changes, such as calling services what they are – Bell Internet FOR BELL TO be RecOgnIZED BY CUSTOMERS AS CANADA’S and Bell TV rather than Sympatico and ExpressVu, LEADIng COMMUNICATIONS COMPANY for example – to its clean and dynamic new look, We are executing on these 5 Strategic Imperatives the new Bell brand reflects our focus on operating required to deliver on that goal as quickly and in the most clear-cut and efficient manner possible. efficiently as possible: It’s a brand that evokes the very best of Bell’s proud 1. IMPROVE CUSTOMER SERVIce history while underlining our even brighter future. 2. AcceLERAte WIRELESS Bell has already laid a solid foundation for our move 3. LeVERAge WIRELIne MOMentUM forward as a customer-focused and competitive 4. InVEST IN BROADBAND netWORKS AND SERVIceS communications company, one dedicated to 5. AcHIEVE A COMPetITIVE COST STRUctURE delivering value to you. We have the structure and We have also put in place a new, more cost- the strategy to compete and win in the marketplace, efficient organizational structure to support our and you have my commitment that we will goal and strategic imperatives.